Draft Vehicle Emissions Trading Schemes Order 2023

Anthony Browne Excerpts

Wednesday 29th November 2023 General Committees

[The Parliamentary Under-Secretary of State for Transport (Anthony Browne)]

I beg to move,

That the Committee has considered the draft Vehicle Emissions Trading Schemes Order 2023.

It is a pleasure to serve under your chairmanship, Mrs Murray. The purpose of the statutory instrument is to provide industry with certainty as it invests in the transition to zero-emission vehicles ahead of the Government’s commitment to end the sale of new non-zero-emission vehicles, cars and vans in 2035. The draft order will be made using powers under the Climate Change Act 2008 to create trading schemes that apply to Great Britain, and to preserve an appropriately scaled version of the current regulations for Northern Ireland. That is because the powers to create trading schemes require the devolved legislatures to each approve the order by affirmative resolution. I am pleased to tell the Committee that this has already happened in Senedd Cymru in Wales, and that approval is expected shortly in the Scottish Parliament.

As the Northern Ireland Assembly is not currently sitting, it is not possible for Northern Ireland to join the trading schemes. It is, however, the firm intent of the UK Government that upon the return of the Northern Ireland Assembly, and should the Assembly choose to pass the required legislation, Northern Ireland will join the trading schemes with the rest of the UK. The Department for Transport will continue to work closely with the Department for Infrastructure in Northern Ireland to support this process.

Decarbonisation of cars and vans is a priority for achieving net zero, since these vehicles alone accounted for 18% of the UK’s total emissions in 2021, and it is a once-in-a-generation opportunity for the UK economy. As my right hon. Friend the Chancellor of the Exchequer said last week, the UK has one of the most innovative economies anywhere in the world, putting us in prime position to leverage our world-leading advanced manufacturing and research and development in the global shift to zero-emission vehicles. To unlock that dynamism, we must approach the transition in a way that allows manufacturers to pursue their strategies but still provides certainty for investors, businesses and families.

That is exactly what a zero-emission vehicle mandate does. It sets ambitious but achievable targets for the percentage of a manufacturer’s cars or vans that should be zero emission each year. Those start at 22% for cars and 10% for vans in 2024 and rise each year to reach 80% for cars and 70% for vans in 2030. Alongside a ZEV mandate, the legislation sets out targets for new non-zero-emission vehicle average carbon dioxide emissions, which will ensure that average emissions do not worsen during the transition, when manufacturers are focusing on zero-emission technology.

Industry overwhelmingly supports this approach. For charge point providers, which have already committed £6 billion to developing UK charging infrastructure, the trajectories give certainty on future demand that gives investors the confidence to think big. Indeed, I met many of them yesterday, and they echoed that. For automotive manufacturers, too, certainty is vital. Product plans can be decided up to a decade in advance. Going zero emission requires the overhaul of factories, and new technologies are pushing the bounds of possibility with every breakthrough.

In this seismic shift and technology transition, clearly setting out how the UK market will develop enables manufacturers to plan for the future and deliver zero-emission vehicles to the UK faster than competitor markets in the EU or North America. Where there is demand, there will also be production. Last week, the Chancellor announced £2 billion of new Government funding to support zero-emission manufacturing in the UK, in addition to the major investments already being secured by the likes of Jaguar Land Rover owner Tata Motors, BMW, Stellantis and Nissan. I am delighted that Nissan announced last week the production in Sunderland of the new electric Juke and Qashqai cars.

This is all part of the Government’s plan to grow the economy and supercharge productivity, with the biggest permanent tax cut in modern British history for businesses, which will now be able to invest for less, boosting investment by £20 billion a year over the next decade. Taken together, these measures will mean thousands of well-paid jobs in communities across the country.

While all manufacturers need to be in the same place by 2035, they are all starting from slightly different positions today. In recognition of that, the flexibilities of banking, borrowing and conversions are included in the draft order. Manufacturers may also trade, allowing over-compliant manufacturers to sell to under-compliant manufacturers at a market-determined price.

The Government recognise that the challenges of decarbonisation are different for the lowest-volume manufacturers, which have an outsized contribution in cutting-edge research and development. A manufacturer that registers fewer than 2,500 cars or vans will not be subject to the zero-emission vehicle targets, but rewarded for any zero-emission vehicles they sell. Manufacturers that register fewer than 1,000 non zero-emission cars or vans will be exempt from the CO₂ targets for non-zero-emission vehicles.

Exemptions are also available for registering vehicle types known as special purpose vehicles, which include ambulances, armoured vehicles and wheelchair-accessible vehicles. That means that manufacturers face no barrier to producing non-zero-emission versions of those vehicles while they are still required. To encourage zero-emission models, bonus credits will be awarded for any SPVs registered. The UK is a world leader in the ingenuity it takes to make those specialist vehicle types, particularly wheelchair-accessible vehicles, and the Government are committed to ensuring that that continues. Further investment is expected. As the Society of Motor Manufacturers and Traders pointed out:

“The automotive industry is investing billions in decarbonisation and recognises the importance of the zero emission vehicle mandate as the single most important measure to deliver net zero.”

This legislation is pragmatic, necessary and vital for the UK to meet its world-leading climate commitments. It is supported by the vast majority of vehicle manufacturers operating in the UK, which have worked alongside the Government to ensure that the legislation can deliver the vehicles needed to decarbonise our national vehicle fleet. It demonstrates the UK’s global leadership in the fight against climate change; the order is the most ambitious legal framework of its kind in any country.

I commend the statutory instrument to the Committee.

[The Chair]

I call the shadow Minister.

--- Later in debate ---

[Anthony Browne]

I thank the shadow Minister for his contribution. I will address all his points, but most were about the change in date from 2030 to 2035 for banning the sale of pure petrol and diesel internal combustion engine cars. I noticed that almost everything the hon. Gentleman quoted from industry was said on the day of the announcement or the day after, before they realised that actually the Government were not changing the zero-emission—

[Bill Esterson]

I think it is important to correct that point. I quoted what the chief executive and president of the SMMT said last night, which is entirely consistent with what they said at the time. I do not think anything has changed since.

[Anthony Browne]

I said “almost” everything the hon. Gentleman quoted. The quotes he cited from ChargeUK, for example, and much else, were about this announcement today. There was concern before the industry realised that actually the Government were not changing the zero-emission vehicle mandate, which we are implementing today. This is what gives certainty to industry. Indeed, I was with the chair of ChargeUK yesterday, and lots of charge point operators, who welcomed this legislation. They have £6 billion of investment that they are rolling out for charge points, precisely because of this.

If the hon. Gentleman fully welcomes the order, and wants to know the reason for delaying from 2030 to 2035 the ban on the sale of pure diesel and petrol vehicles, it is because at the time that the 2030 announcement was made, the evidence suggested that hybrid cars performed far more efficiently than pure internal combustion engine cars, whereas the more recent data shows that there is relatively little difference in performance. It cannot, therefore, be justified to ban the sale of one type of car while allowing the hybrid cars. From a consumer point of view, we should let them choose which type of car until 2035.

On a broader point, the hon. Gentleman touched on the carbon budgets. We have had three carbon budgets so far, and we have exceeded every single one of them by about 14%. We are way ahead of schedule and where we said we would be at this point in time. As the hon. Gentleman knows, if we look at our carbon dioxide reductions historically since the benchmark year of 1990, not only are we the leader of all the major European countries, we are the leader of the G7. Our greenhouse gas emission reductions are the greatest of any country in the G20. We are genuinely world leading on this. Looking at our future targets, the UK’s nationally determined contribution is 68%, and the EU’s is 55%. We are going to cut far faster than other countries. That is what gives us the leeway to be flexible on things in quite a minor way to give consumers more choice as we get to net zero. The impact of the announcement in terms of carbon dioxide emissions is about 1% of the total impact of these regulations.

The hon. Gentleman asked about the OBR report and questioned whether it thought we were going to meet the mandate. We are not allowed to show things, but I have the OBR graph here. It has underestimated our electric vehicle roll-out at every single stage. We have surpassed all its forecasts. Its latest forecast shows that it thinks we will meet the mandate and meet 100% zero-emission vehicles by 2035 and 80% by 2030. That is not surprising, because, as the hon. Gentleman mentioned, that is what the industry itself is planning anyway. Sixty-seven per cent. of our car market is already committed to being 100% zero emissions by 2030—I think I am right in saying that that includes Ford, Stellantis and Nissan. All major car manufacturers are committed to 100% zero-emission vehicles by 2035. That is the trajectory the industry is on. This instrument gives them the certainty for it, but that is what is happening.

The hon. Gentleman asked when we will publish the details of the amounts on the targets for 2030 to 2035. The Government have mentioned indicative amounts, but we have not legislated for that yet. We will review all this in 2027 and there will be a second review in 2029. The hon. Gentleman also asked about the charge point roll-out. We have now surpassed 50,000 public charge points in the UK, of which one fifth—about 10,000—are rapid charging units. I want to see that go faster, but as I said, when I met the charge point operators yesterday, they were incredibly excited about rolling out incredibly fast. There is a wall of private sector capital—£6 billion. The number of charge points has increased by 45% over the last year compared with the previous year, which is an incredibly rapid roll-out.

Last night, instead of going to the all-party parliamentary beer group, I looked at electric vehicle statistics across Europe, because we are sometimes criticised for how the market has developed in the UK. If we look at the six major countries in Europe, Poland and Italy are at about 4%—we would not expect them to do that much. Spain is a bit higher at 4.7%. France, which we always look at as a great country for doing this sort of thing, is at 15.5%. Germany, the great automotive superpower of Europe, which has great engineers and everything else, have 15.8% electric vehicles. In the UK, 16.1% of our market is electric vehicles. Our electric vehicle market share is the greatest of any major country in Europe. That is a record to be absolutely proud of. This instrument will accelerate that far further.

The hon. Gentleman asked for a vote on the delay to 2035—he will not get that. I cannot commit to that, and we will not do it. I set out the reasons for that. I think I have answered all the points, so I will make my closing remarks.

The order is the most ambitious piece of legislation of its kind in any country anywhere in the world. Indeed, it is the biggest single act this Government are making to reach net zero. It is overwhelmingly supported by industry, which has helped to develop it. It establishes a clear pathway for the decarbonisation of our new car and van fleet. It will encourage vehicle manufacturers to invest in zero-emission vehicle manufacturing in the UK, encourage charge point operators to invest in our infrastructure network, and support jobs and working people as we move to a cleaner economy. I hope the Committee has found the debate informative and short, and that Members will join me, alongside colleagues in Senedd Cymru and in the Scottish Parliament, which have already approved this legislation, in supporting this instrument.

Question put and agreed to.